In late February President Trump and Commerce Department Secretary Wilbur Ross
recommended steep tariffs on foreign steel and aluminum that may affect US suppliers in the
defense and aerospace industries, as well as many other industries that use the essential
metals. Trump’s declared objective is to protect the U.S. domestic market from weakening,
removing competition from other countries. With the threat of steep tariffs, the Dow Jones
industrial averages have been falling and sourcing is increasing in U.S. suppliers.
Specifically, the new tariffs will be raised 25% on steel and 10% on aluminum. The intended
goal now is for the U.S. output to increase by at least 80% because steel imports will be cut by
13.3 million metric tons and aluminum imports by 669,000 tons. U.S. companies are preparing
for this surge in production, unsure where the future may lead the industry if steel and aluminum
access is limited to the domestic market.
Markets Around the World Are Reacting and Concerns Brew
Upon hearing the news, the markets were quick to react. As of March 2 nd , the Dow Jones had
fallen 420 points lower on the previous Thursday, dropping 1.7 percent. Japan’s Nikkei lost 2.5
percent and Hong Kong’s Hang Seng was down 1.5%. European markets were also down. The
announcement also boosted the stock prices on Wall Street for major U.S. steel and aluminum
producers. Major names of manufacturers include Nucor, U.S. Steel, AK Steel, Alcoa, Arconic,
and Reliance Steel and Aluminum.
With aluminum predicted shortages may impact sourcing activity for this metal. Some analysts
see a potential deficit of 361,000 tons in 2018, leading to a scramble to keep up with product
demand. Another large factor contributing to this deficit is imports from China decreasing due to
the country finally attempting to mitigate the country’s excessive aluminum production and
massive pollution problem, along with the closing of legal and illegal smelters.
The President has until mid-April to completely follow through on his administration’s actions,
but we at etaGLOBAL are keeping an eye on sourcing activity as the week go by. A boon may
occur in production as trade dynamics change around the world.
etaGLOBAL Keeps You in the Know
With unknown factors muddling potential outcomes of President Trump’s decision, the future of
steel and aluminum is not clear. Hoping for a thriving market as a result of increased domestic
production is the president’s objective, keeping output and quality within the U.S. For any
questions you may have as time progresses, we’ll supply the answers we can. Contact today for